Govt plans India-style electricity exchange to reform power sector

The federal government is working on establishing an electricity exchange in Pakistan, modeled after India’s power market, as part of broader power sector reforms. 

BR reported, citing sources, that Prime Minister Shehbaz Sharif has tasked Power Minister Sardar Awais Khan Leghari, who also heads the Task Force on Power Sector Reforms, with preparing a comprehensive electricity exchange plan for review.

In a recent meeting, the prime minister directed the Power Division to present solutions for net metering implementation and a strategy for reducing distribution company (DISCO) losses through technological interventions. 

The government is also reviewing tariff reductions, with plans to classify internal measures that can be implemented independently and those requiring external consultations.

Additionally, the Power Division has been instructed to submit a recovery plan for loss-making DISCOs, particularly in Khyber Pakhtunkhwa, Balochistan, and Sindh, where high losses and electricity theft remain major concerns. The Task Force chairman is also set to finalise the Competitive Trading Bilateral Contract Market (CTBCM) framework, which aims to enhance competition and efficiency in the power sector.

The privatisation of DISCOs remains a contentious issue, with provinces showing little enthusiasm for taking ownership. The Sindh government has refused to acquire Hyderabad Electric Supply Company (HESCO) and Sukkur Electric Power Company (SEPCO), citing their financial instability. 

Similarly, Balochistan’s government has declined to take over Quetta Electric Supply Company (QESCO), urging the federal government to proceed with its privatization instead.

In Punjab, the provincial government had initially approved hiring a Transaction Advisor for DISCO acquisition but halted the process after the federal government shifted focus to privatization. Three Punjab-based DISCOs—IESCO, FESCO, and GEPCO—are now in advanced stages of privatization, while discussions continue over a long-term concession model for three other DISCOs.

Meanwhile, Khyber Pakhtunkhwa is still evaluating the federal government’s proposal. Brig (Retd) Tariq Saduzai, Special Assistant to the KPK Chief Minister, confirmed that the province is considering the takeover of DISCOs and has held preliminary discussions with the federal government. 

However, he emphasized the need for proper due diligence, expert consultation, and the appointment of Transaction and Financial Advisors before any decision is made.